Melbourne-based web series That Startup Show has released all six episodes of its first season on BitTorrent, surpassing 130,000 downloads within 24 hours. The show focuses on the issues facing Australian entrepreneurs and the local startup ecosystem and has caught the eye of people such as Google’s director of engineering Alan Noble and 500 Startups founder Dave McClure. For the show’s final episode, which was filmed on Wednesday night as part of the Connect 2015 festival, stand-up comedian Simon Taylor replaced Dan Ilic as the show’s host. Ilic is now working for Al Jazeera in San Francisco as the media company’s chief satirist. Since launching in August last year, the web series has attracted more than 200,000 viewers across Australia, the US, Europe and Asia. The show has also received a capital injection from angel investor Alan Jones and technology foundry Digital4ge. Well, we just hit 55,000 downloads! #whoa #amazing #tsushow — That Start Up Show (@tsushow) April 22, 2015 Co-producer Sally Gatenby told StartupSmart as of this morning the show has been downloaded 133,000 times. “It’s a wonderful testament to the desire for this type of entertainment and content but also for the particular model of the way we’ve done it,” she says. “By going via BitTorrent we’re able to deliver it to people directly. It’s a waiting audience who are very much in this space – they’re online constantly and entrepreneurs or tech people themselves.” More than 300 people were in the crowd for the filming of the season’s final episode, which was shot at Melbourne’s Savoy Tavern. The episode saw Josh Young from AUUG Motion Synth win the program’s PitchDown competition – which means he will be sent to the US to pitch his startup to investors. “We will follow the winner to the states and film them on their journey because invariably you never see what happens after people win pitch events or get funding,” Gatenby says. “It’s great we’re having pitch events and people wining pitch events, but it would be awesome to see what people are learning. So we’re really keen to bring that insight – we’re trying to bring a little bit more experience and transparency to what it’s like to be in a startup.” Planning for the second series of That Startup Show is underway. Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Entrepreneurs, finance executives and policymakers to come together for the Collaboration in Fintech Conference3:43AM | Wednesday, 18 March
A conference bringing together entrepreneurs, investors and policymakers in the fintech space will be held later this year in order to promote better collaboration in the sector. The Collaboration in Fintech Conference will run on June 10 and 11, with attendees hearing from the founding director of Innovate Finance, Claire Cockerton, as well as a range of policymakers and banking executives. The entire second day will be set aside for a masterclass with Cockerton, with the aim of learning how to establish a culture of innovation in the finance sector as well as the right regulatory environment. Only half an hour has been set aside to hear from a panel of fintech startup founders, with another session set aside for VCs and longer sessions for regulators and finance executives. hilarious: 2 day fintech innov conference includes total 30mins of speaking from fintech startup founders http://t.co/SbkzAb025N — alan jones (@bigyahu) March 17, 2015 However, conference organiser Samuel Clist says the event is about bringing everyone together in the same room – which means devoting time to more than just entrepreneurs. “It’s an opportunity to be in the room with government, regulators, with banks and venture capitalists,” he says. “With these startups there’s two types – the ones trying to drive themselves forward and find that capital to give them an opportunity. And the second kind is looking at trying to get into the bigger organisations… and how their product can be used to support these organisations.” Clist says the conference will also be hosting a “startup showdown” after lunch where entrepreneurs in the fintech space can pitch their ideas. Australia has seen a number of fintech hubs spring up recently. In Sydney, the Stone and Chalk accelerator launched earlier this month with a co-working space due to be ready by May. Last week, Melbourne saw the launch of The Cluster’s second co-working space. Clist says it is important to bring “all the key players” together to discuss how Australia can establish itself as one of the best fintech ecosystems. “There’s more and more of these fintech organisations entering the market and they’re looking at the moment to go to the next level,” he says. “We really needed an event in this space to build this ecosystem because the major issue for a lot of key players in this space is they’re trying to do work by themselves – they’re trying to get in conversations with the government and regulators and need a little bit of help to go to the next step.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
A lack of female startup founders in BlueChilli’s latest startup program is a reflection of problems in the broader industry, rather than the recruiting process, according to the program’s organiser Colette Grgic. BlueChilli announced the 10 finalists for the [email protected] program earlier this week, among them was a sole female founder Sujata Karandikar and her startup Swopped – a transparent global supply chain. Nineteen of the 146 applications BlueChilli received were from women. “I personally marketed to and recruited applicants from female networks because I wanted to have a podium filled with women for a change,” Grgic says, “We were transparent about the number of female applicants and quite incidentally, the final 10 is representative of the gender split in the application pool. However, during selection, gender made no difference. The judges reviewed applications blind for the first round, i.e. they did not know the names, origin or the gender of the applicants. It was only in the second round that we also looked at the founders themselves to ensure they were capable of executing. “I do have an issue that there is only one female finalist, but not because of the process… because of the systemic lack of female founders (cultural/social/educational issues), which go way deeper than just one startup competition.” Among the 10 startups selected was Flexpert Careers, a startup which aims to encourage mothers back into the workforce in corporate Australia. The startup is founded by Joel McInnes, and BlueChilli chief growth hacker Alan Jones says if he’s smart, he’ll quickly add a female co-founder to his team. Grgic says it’s refreshing to see a startup tackling gender diversity. “If it’s a big enough problem to have solved, then frankly I don’t think it should matter which gender solves it (because that would be gender bias),” Grgic says. “We often see people trying to solve their own problems with startups, and because of the existing gender skew in startup land (see StartupMuster report details – 19% I believe) that means we also see a disproportionate amount of startup ideas pitched that solve problems for men or from a male perspective. Personally, I think it’s refreshing that the Flexpert team care enough about this problem to take action – gender diversity is everyone’s issue.” An initiative targeting early-stage startup founders, the program will offer four of the 10 finalists $50,000 investment initially, in exchange for 30% equity and a further $25,000 in funding upon completion. Here’s the complete list of finalists: Batchy – order products and services in bulk to save money (Giovanni Ravone). Flexpert Careers – encouraging working mothers back into the workforce in corporate Australia (Joel McInnes). ResponSight – security access and activity reputation monitoring (Jeff Paine). Meeting Mate – making online meetings more efficient, accountable and productive (Avron Rubin). Mobile Workforce Management – managing shared space with iBeacons (Matthew Pope). Pop Ad Shop – connects empty commercial space to brands, retailers, artists, and hospitality providers (Chris Hansen). Safety Compass – augmented reality OHS&E risk management app (Adam Poole). ShareBetter – P2P marketplace solution for maximising the utilisation of internal company resources (Chris Noone). Social Super – marketplace for advisors and fund managers (Mitchell McLaurin-Smith). Swopped – transparent global supply chain (Sujata Karandikar). Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Getting a critical seed-round investment all comes down to proper preparation, according to BlueChilli’s chief growth hacker. Speaking at the SouthStart conference in Adelaide this morning, Alan Jones emphasised the importance of not using a traditional pitch deck template when approaching investors for seed funding. “Save that structure for that really high investment or Series A,” he says. “In the seed round you really want to tell a passionate story. If we were rational investors we would be buying property – we’d have a balanced portfolio. We are very, very passionate about what we do.” Jones says it is also important to establish a brand and find a co-founder because VCs like to invest in startups that have a lot of initiative and aren’t just waiting around for funding to fall into their lap. “Just choose a brand name, something which isn’t taken, something you can get a domain name for and social media and get a logo from 99designs,” he says. “Go out and see if you can get co-founders – take a long, hard look at yourself. Most investors won’t invest unless you have at least one co-founder.” Keeping a spreadsheet of which investors you’ve contacted, what they’ve previously invested in, and when you need to get back to them is also good practice, says Jones. “You want to keep track of who you’ve approached and when you approached them,” he says. “If you get a sign of interest you want to track those sorts of things and take note of what things you said to them and what worked.” Investors also want to know that you have relevant industry experience, according to Jones, so it is important to show them that you are not trying to reinvent the wheel but rather solve a problem you know all to well about. “So if they [founders] have been through that process before in a previous venture – whether they’ve been an investor or founder before – that really helps,” he says. “Up-to-date experience is unfortunately a very rare thing in Australia’s technology scene.” Jones says one of his pet hates as an investor is when a founder emails him with too much information and doesn’t get to the point. “We’re time poor and secretly like to be,” he says. “It’s how we are wired but we get too many approaches and not enough good opportunities. So summarise, summarise, summarise and get your action points at the top [of the email].” While getting to a seed round is hard work, Jones says seed funding is just the beginning. “The clock starts ticking from the day the cheque hits the bank. You have to invest in the marketing you’ve proved is going to work and most critically start working to that next round of investment.” Jones’s top three things to understand about Australian investors: 1. They aren’t investing for rational reasons 2. Show them how they can help and they often will 3. More investors follow than lead StartupSmart travelled to Adelaide courtesy of Brand South Australia. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
BlueChilli is looking to invest in early-stage startups as part of its [email protected] program. However, some Australian entrepreneurs have raised concerns over the amount of equity the Sydney-based accelerator is asking for. As part of the program, four teams will each receive a $50,000 investment initially in exchange for 30% equity, and then a further $25,000 upon completion. In addition, the winners will take part in a six-month accelerator program and receive support from a large Australian financial institution which is yet to be announced. Alan Jones, chief growth hacker at BlueChilli, told StartupSmart the accelerator is looking for startups that focus on mobile and online communications. “We think is the first opportunity for the people at the idea stage to get their idea backed – and that $75,000 is a pretty substantial backing,” he says. “It’s not just about the cash, you get to enter the BlueChilli accelerator program and spend time with us. And we can actually build the startup technology for you as part of the program.” Jones says he hopes the program will encourage new people into the startup ecosystem who might not otherwise make the jump from the corporate world. “Blue Chilli exists to serve a particular problem that Australia has, in that we have a shortage of entrepreneurs but we do have a real shortage of technical co-founders and early-stage people.” Jason Seed, president of Kounta.com, told StartupSmart he thinks there are a combination of issues with the [email protected] program. “There is not enough money to build anything worthwhile combined with too much of the company given away,” he says. “There is no chance that you can both build a product and release it commercially for that much money. The consequence of this is that the founders will likely lose their control of the company at the next round and in that situation it is very rare for a startup to succeed.” Seed says startups should not be giving away more than 20% of their company each time they raise money in order to build a product based on their own vision. “It is critical for the founders to control the company in the early days,” he says. “It is their vision that they are following and if they can no longer set the direction or feel at risk of loss of their company or position, the company will flounder… good quality investors understand this.” However, Jones says while there are a number of accelerator programs in Australia that ask for less equity in exchange for investment, [email protected] is different for a number of reasons. “In all those programs you can’t just be at an idea stage because competition in those programs is increasing all the time – this program addresses people much earlier in the cycle,” he says. “The way the investment stage works is the earlier it is, the risker the investment is, and they [the investors] can rightly claim they have a larger stake in the business. We’re asking them to put their brains behind the business and make it work, so it has to be worth their time as well. “The most important thing is that people apply for the program which is best for them and we don’t want to pretend for a moment this program is right for all startup founders.” Entries for BlueChilli’s [email protected] program close on Friday, January 30. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The difference between a good pitch and an average one can see your startup either getting much-needed venture capital or the cold shoulder from investors. A critical aspect of a pitch is the pitch deck – the slideshow that outlines essential details about the business, the problem it’s solving, competitors and market size. StartupSmart spoke to two industry experts for their thoughts on how to improve your pitch deck. 1. Tailor the pitch to the investor and keep it simple Mick Liubinskas, from muru-D, told StartupSmart it’s firstly important to recognise that there are different kinds of pitch decks and they serve very different purposes. “A pitch deck sent is completely different to a pitch deck presented,” he says. “Unfortunately for an entrepreneur, you’re going to end up with 50 different versions of your pitch deck over time.” Liubinskas says one of the biggest mistakes people make is to put too much information in their presentation. “You’ve really got to consider your audience and objectives,” he says. “If your objective is to get another meeting or interest you don’t have to do everything – you only have to do enough to get another meeting. If you’re pitching to an event where there are multiple pitches, it’s important to get the one message across and reiterate that like crazy until it sinks in.” Alan Jones, chief growth hacker at Blue Chilli, agrees. “Too much information in a deck makes it hard to find the essential investment information,” he says. “Investors don’t have the time to re-read in detail, and you reduce the chances they’ll recall this information when discussing your pitch with others influential in the investment decision.” Jones also says he sees far too many pitch decks that follow the class VC pitch deck template. “Do you want to blend in, or stand out?” he asks. 2. Show confidence and deliver on your promises Investors are looking to see if there is a big opportunity in your startup, Liubinskas says, and one thing they look for when considering an investment is whether the team has something that makes them stand out from the crowd. “Does the team have a significant differentiator? Does the team have some momentum?” he asks. “A lot of people use future language… ‘We are going to try.’ But they [the investors] need to have supreme confidence.” The other thing to keep in mind is that investors typically invest in startups after they establish that there has been a track record of some kind. “Unless you’ve done business with them before, you need to show them you’ve already executed and they’re probably going to want to see you execute three to four times,” he says. “What I encourage people to do after a pitch is to communicate to the investors once a week… go back and show you can do what you say you can do.” Jones says while it’s important to give investors the information they need to make an informed decision about your startup, you should also play to your strengths and understand that emotion also plays a role in the pitching process. This could mean cracking a joke if you’re naturally funny, or having a strong narrative arc if you’re good at telling a story. “Plan to engage their emotions,” Jones says. “If you’re successful, you can raise a round on better terms than your competitors, give yourself more runway, and have a little more breathing room. Maybe even buy a foosball table.” 3. Don’t just talk about the product and avoid buzzwords Sometimes as an entrepreneur it is easy to get caught up explaining how a new product or service works instead of explaining why people need it, according to Liubinskas. A good way to test out your pitch deck is to present to a stranger and see if there is any jargon that stops them from understanding. “Most people spend far too much time on the product,” he says. “If I don’t think there’s a problem worth solving then I won’t think the product is worth it.” Liubinskas says it is also crucial to talk about the market. However, too many entrepreneurs only do a top-down analysis in their pitches. “So they say the total market for this product is $10 billion, but they should also do a bottom-up analysis which says if we get 10,000 in sales at $100 each that’s a million dollars in revenue.” Jones says entrepreneurs should avoid using buzzwords in their pitch decks whenever possible. “Repeated use has blinded your audience to these words,” he says. “Buzzwords try to describe what your solution is but that’s not really important. It’s not as important as explaining what it does for your customer, and how much your customer cares about that being done for them.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The results from the latest Startup Muster survey indicate Australia still needs work when it comes to diversity in tech, as well the ambition of founders, according to a number of investors. BlueChilli chief growth hacker Alan Jones says it’s “maddening” to see 27% of startup founders estimating their market size is less than $10 million. The figure is so startling that it makes Jones wonder whether or not respondents understood the question and thought they were estimating the current valuation of their startup. “Because if you aim to steal 5% of a $10 million market, even if your net margin is huge, that’s never going to be worth the risk of doing a startup – you’d be better off opening a café or a plumbing business,” Jones says. “Startups should be shooting for the Moon, but it sounds like we’re still guilty of shooting for Moonee Ponds.” That number also had Colin Kinner, the author of the Crossroads report and director of Spike Innovation, wondering whether the survey had picked up a lot of non-startups that are lifestyle businesses. Startup Muster organiser Murray Hurps says in addition to the validation steps, he manually reviewed the companies to ensure they were leveraging technology to create something scalable, the correct definition of a startup, and there didn’t seem to be any misunderstanding of the term. It’s a concerning figure, given startup academic Steve Blank’s advice that startups are either born global or die local and certainly could be a factor contributing to another survey finding – 18% of startups had tried and failed to raise capital. As Jones points out, few investors are going to take on investments with such limited upside. Blackbird Ventures managing director and founder of the Startmate accelerator program Niki Scevak agrees a lack of ambition was the most striking of the survey’s findings. “What sadly stands out is the lack of ambitious founders creating global startups and chasing huge markets,” Scevak says of the survey results. “We created Blackbird and Startmate to provide capital and a network of likeminded founders to help those who dare to make a big impact but there is a long journey ahead. It’s easier in my opinion to build a large ambitious company than a small unambitious one. “It’s harder to get great employees, investors and partners when you are doing something uninspiring. So hopefully in five years’ time the numbers will be flipped. Come on Australia!” AirTree Ventures partner Craig Blair says the figure leads him to believe that this survey is a sample of early stage startups. “The opportunity for the Australian startup ecosystem is to convert these into Series A funded business. This will require addressable markets of more than $10 million, product market fit achieved and distribution starting to work,” he says. Blair was surprised that just 6% of startup founders were under 25, and encouraged that the number of female founders had increased from 16% in 2011 to 19% in 2013. Jones was frustrated at the slow pace of progress. “It’s frustrating to see we’ve made so little progress in changing the gender balance in the Australian startup industry but that might be because we need more girls studying STEM and entrepreneurialism to create more female startup founders, which would mean we won’t see the fruits of those efforts for another 5-10 years,” Jones says. “I’d like to see if the percentage of women in senior exec roles in Australian startups has changed in the near term, and the proportion of women holding equity or options in Australian startups.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
South Australia’s largest startup conference has announced its keynote speakers for 2015, with Shark Tank investor Stephen Baxter, OneShift founder Gen George and BlueChilli’s Alan Jones set to share their knowledge with local entrepreneurs and investors. SouthStart 2015 is the second year the conference has run. Around 600 people are expected to attend, with 50 companies exhibiting their software and products. Chhai Thach, event founder and the director of Majoran Distillery, told StartupSmart the conference’s sophomore year will be bigger and better than its debut. “First year was very hard having no funding, but we were lucky to be able to get sponsors this year,” he says. “The sponsors are supporting us as well as the state government, so we are able to bring in speakers from overseas.” Thach says he wants SouthStart 2015 to be “a bit more of an investor-friendly conference”. “One of the first things we have to do is try to get the traditional investors to come along and learn from the people like Elaine Stead from Blue Sky and just to talk to other investors about potentially investing in startups,” he says. “A lot of people are curious about doing that but don’t know how to get started.” The conference will be mainly about showcasing South Australian startups, according to Thach, however, he says it is also “open to anyone, anywhere”. “We want them to come and connect with the local community here,” he says. “The more people that know about startups and get excited, the more people will get interested and inspired to start something new this year.” Thach hopes the timing of the conference will see more Adelaide startups launch in 2015. “People would have been considering their path for the year [over the summer break]… if they can come and be inspired to do something, that will be awesome,” he says. SouthStart will take place at the Adelaide Convention Centre from February 4-5. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
It’s been a big year for the Australian startup ecosystem. Success stories like Atlassian and Campaign Monitor continue to go from strength to strength and the ecosystem is growing. According to the Australian Private Equity and Venture Capital Association the 2014 financial year saw the highest level of venture capital activity in dollar terms over the last 10 years. That uptick was despite “tough fundraising conditions” and the federal government’s termination of the Innovation Investment Fund weighing on local venture capital activity. Here are some of the startups that contributed to the ecosystem’s success and caught StartupSmart’s eye over the past year. In no particular order: 1. Eyenaemia What better way to begin than with a startup that literally wants to save people’s lives. Anaemia, a deficiency in the number or quality of red blood cells, currently affects an estimated two billion people worldwide, including 293 million. It is the cause of 20% of maternal deaths every year. It’s an easily treatable condition but is often symptomless. If left untreated it can lead to serious complications. Eyenaemia has developed a simple non-invasive treatment, which allows anaemia to be diagnosed through a mobile app, and a quick selfie. They won the Microsoft Imagine Cup, and are currently conducting large scale field tests to confirm their solution works. 2. Canva Sydney-based design startup Canva’s goal is no less ambitious – it wants to “democratise design”. This year it rolled out its design marketplace, which allows professional designers to contribute layouts and earn royalties every time their designs are purchased. Perhaps most significantly, it also signed up Apple’s original Mac evangelist, Guy Kawasaki, as its chief evangelist. 3. Scriptrock Startmate graduate ScriptRock, an Australian IT DevOps company, raised $9.8 million in a Series A round, led by August Capital. Also participating in the round were Peter Thiel’s Valar Ventures, and Square Peg Capital. As of August, less than 12 months after launch it had signed up 600 customers and is looking to scale up growth. 4. CoinJar Australia’s leading bitcoin startup left Melbourne, setting up its headquarters in London, a city competing with Australia to be the world’s leading fin tech startup location. The relocation is part of the startup’s grand plan to expand into Europe. It also released Australia’s first bitcoin debit card, which enables bitcoin to be used to pay for goods and services anywhere where debit cards are accepted. If (when) digital currency becomes mainstream in Australia, there’s a good chance CoinJar will have had a lot to do with it. 5. Invoice2go Invoicing app startup Invoice2go was one of Australia’s big startup success stories of 2014. Founded by Chris Strode in 2002, in 2014 the startup raised $35 million led by Accel Partners and supported by Ribbit Capital. It’s got serious traction in the form of 120,000 customers and is looking a potential market of 100 million. 6. LIFX After holding one of Australia’s most successful kickstarter campaigns, smart lightbulb maker LIFX took out the top award for smart systems in the consumer goods category at the 2014 Edison Awards. It then partnered with Sequoia Capital and raised $12 million in Series A funding. It wasn’t without setbacks, however, after concerns emerged that its light bulbs could be hacked, leading to debate about the security of IoT devices. 7. VentureCrowd Australia’s first equity-based crowdfunding platform, VentureCrowd helped facilitate the raises of two companies, opening up a new way for startups to raise capital. Transportation network and mobile payments startup ingogo used VentureCrowd to raise $1.2 million of a $9.1 million raise in September. It then helped fashion startup Fame and Partners raise $50,000 of a larger undisclosed funding round. With regulation that will open up equity crowdfunding to retail investors expected to arrive mid next year, these two deals look like just the first of many. 8. OneShift Online recruitment platform OneShift has grown to service 400,000 job seekers and 35,000 businesses. The platform, which founder Gen George describes as a “dating website for jobseekers”, matches employees with businesses looking for anything from one-off shifts, causal work, or permanent employment. The startup impressed Reddit co-founder Steve Huffman at a pitch session at Above All Human in Melbourne earlier this month. 9. That Startup Show The web-series produced in Melbourne wasn’t even a startup when it launched. Since the pilot episode launched on YouTube in August, the series has attracted more than 110,000 viewers across Australia, Europe, Asia, Canada and the United States. It secured angel funding from Alan Jones and technology foundry Digital4ge and completed filming its first season. Co-founder Ahmed Salama says the vision for That Startup Show is to provide a voice for startups not just in Australia but around the world. It’s also been negotiating with a number of possible distributors, including TV networks. 10. Shoes of Prey The Sydney-based online retailer is taking on the world. Earlier this month it raised $6.5 million from US-based Khosla Ventures in December. Those funds will be used to finance its bricks-and-mortar expansion in markets, including the United States. It’s already opened an office in New York and will be available in Nordstrom stores in Seattle, Washington, California, New Jersey, Illinois and New York. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Everybody wants to be startup. Recently, The Guardian claimed they were one, along with Westpac and a number of other large and well-established companies. And if they’re not claiming to be one, they certainly want to get in on the startup action, the latest being KPMG. The professional services firm has just announced a partnership with Artesian Venture Partners that will enable it to gather non-sensitive data, from up to 1000 startups over the next five years. The data will come from a number of funds which it operates including, the Slingshot Venture Fund and the BlueChilli Venture Fund, the funds behind the Newcastle-based Slingshot Accelerator Program and the Sydney-based BlueChilli incubator. In addition, it also operates the Sydney Angels Sidecar Fund. It provides investors with tax free exposure to all those funds through its Australian VC fund, for which it’s currently raising $100 million. Artesian Venture Capital COO Tim Heasley says the data will inject some much needed evidence into the Australian startup ecosystem. “The partnership allows us to accelerate the capital raising for the (Australian VC Fund) through KPMG’s corporation connections. Importantly, it gives us a means of capturing and ultimately processing data from the Australian startup ecosystem, data that has been missing or lacking up until now,” he says. “No one has a complete read on what’s happening, what verticals are being targeted? What are the technical of other backgrounds of founders? How many have had other successful startups? How many are women? Men? What age range? “Once we have that info we can start reporting it in a meaningful way, we’re going to end up with a rich data set, and we’re effectively professionalising the startup investment scene in Australia.” KPMG was one of three professional service firms that tendered to become Artesian’ s partner, with KPMG Australia head of innovation Martin Sheppard saying it’s an important milestone for the firm when it comes to doing business with startups. “Proactively engaging with Australia’s startup ecosystem is critical to our innovation strategy,” he says. “It will expose us and our clients to new growth opportunities; provide early insights into emerging and disruptive technologies, and help us and our clients stay ahead of the curve.” They’re not the only ones seeing the opportunity. Telstra, was one of the first starting its Muru-d accelerator program. But there are other signs too. Pollenizer, BlueChilli and 25fifteen are used to hearing startups pitching to them. Now they’re doing the pitching too. Competing to secure lucrative consultant-like roles with big incumbents in a whole host of industries, including banking, insurance, telecommunications, and logistics – shipping, warehousing, things of that nature. Services they provide range basic lean startup education courses, organising and running hackathons. BlueChilli chief growth hacker Alan Jones says corporates are aware of the competition that startups face. “Primarily what they’re aware of as a corporate is a lot of disruption in their industries is going to come from startups in the next five to 10 years,” he says. “They can see evidence of this already, particularly in banking and insurance, in travel and even in industries like automotive and airlines. We’re starting to see online native, early stage startups creating industries that have never existed before massively disrupting traditional industries. “So if there’s an opportunity to invest one million in a couple of years, in a startup that may eventually contribute 20% of your annual revenue, why wouldn’t you start exploring that?” Jones says the nature of accountability in big corporates leads to a risk averse culture and that, combined with large slow moving corporate bureaucracy, means innovation is a weakness not a strength. Realising this Woolworths recently made its own attempt to engage with startups when it launched its Wstart program. According to the program’s website it aims to foster Woolworth’s relationships with startups, bit at this stage is not doing much more than meeting with them. The first event is speed dating that gives successful applicants a chance to showcase their idea “and gain insights from the Woolworths team”. StartupSmart asked Woolworths to elaborate on its goals, they types of relationships it plans on fostering with startups, and whether it might lead to investment. “Wstart is a new program that aims to open up communication between Woolworths’ business and the startup community to drive innovation that will simplify the shopping experience for our customers and improve our business,” a spokesperson says. “We understand for a lot of startups there are few opportunities to engage with industry leaders and large organisations. Wstart is an opportunity for them to network and be mentored by senior Woolworths executives and collaborate with likeminded individuals.” No comment on whether or not it will lead to anything more meaningful, like investment or an ongoing relationship with the startups involved. Pollenizer partnerships manager Nicola Farrell says its great Woolworths is joining a growing trend of large enterprises realising that startups can help them experiment and learn faster. “We look forward to seeing a structured program in place which drives compelling outcomes for the startups involved,” she says. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
That Startup Show, the Melbourne-based web series aimed at the startup community, has announced the line-up for the final instalments of its premiere season. The panel of experts for the final four instalments include chief executive of Shoes of Prey Jodie Fox, Chris Ridd from Zero, chief executive of Thankyou Water Daniel Flynn and country manager of Airbnb Sam McDonagh. Hosted by comedian and tech commentator Dan Ilic, the show focuses on the Australian startup ecosystem and the issues facing local entrepreneurs. The aim is to bring together entrepreneurs, incubators, investors and creatives to celebrate all things innovative. Since the pilot episode launched on YouTube in August, the web series has attracted more than 110,000 viewers across Australia, Europe, Asia, Canada and the United States. That Startup Show recently announced funding from angel investor Alan Jones and technology foundry Digital4ge. The capital injection will allow the production to complete the remaining episodes for 2014 and build an online platform. Series co-founder Ahmed Salama told StartupSmart the premiere season was really about validating the concept and the response to the series so far has been overwhelmingly positive. “That’s only going to help us expand and grow even more,” he says. “We’ve got a few exciting things planned for next year. Our vision is to grow this show beyond a show and into a platform to give a voice for startups not just in Australia but around the world. “For us to do that, we have to take it to the next level and mature the show into the platform it can be. We look forward to doing that.” The final four episodes That Startup Show for this season will be filmed live between Monday November 24 and Thursday November 27 at The Savoy Tavern in Melbourne. Tickets are available here. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
For the last decade the startup industry has been “envied, pilloried and lots of other things but it hasn’t been understood”. It’s a lament that led to angel investor Alan Jones, also chief growth hacker at BlueChilli and investor at Startmate and Blackbird Ventures, to invest in the popular web series That Startup Show, which he believes has the potential to play a major role in making the startup industry more accessible to the wider population. Jones participated in That Startup Show’s first round of investment as it negotiates with online media channels about possible distribution deals. “I believe in the team’s ability as great storytellers, and that’s fundamentally what I’m backing,” Jones says. “It’s not my first entertainment product investment, I’ve also invested in some documentaries and short films, but for me this combines two of my great passions: startups and great storytelling. “Engaging with the broader entrepreneur community is vital if we’re to continue the momentum we now have in Australia’s startup industry.” Joining Jones as an investor is Digital4Age, a startup accelerator run by entrepreneur and angel investor Jamie Pride. “Digital4Age is excited to be involved with That Startup Show,” he says. “We love the concept and the energy of the team, and it’s great to be playing a part in the startup community in Australia with a media platform that has a great deal of potential in the media space.” That Startup Show co-founder Sally Gatenby says the funding will be used to complete the remaining four episodes in 2014, set to be filmed on the November 24, 25, 26 and 27, and to build out its platform of online and event content. "There’s been a lot of interest internationally to replicate this overseas on a local level, and creating events around it too," Gatenby says. For tickets to That Startup Show, head over to its Eventbrite page. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
BlueChilli last night launched its first venture capital fund of $10 million, the minimum under ESVCLP (Early Stage Venture Capital Limited Partnerships program) rules, with the aim to invest in vetted companies that have gone through its incubator program. In launching the fund, BlueChilli CEO Sebastien Eckersley-Maslin told the crowd the fund allowed investors to support early stage startups with “mitigated risk”. He says BlueChilli has developed a model that worked to create a system that de-risked the four key areas it looked at in a startup in order to invest; namely team (it supports the founders with its own internal team), technology (companies are built on its own internal platform), traction (elevated through partnerships) and term sheets (something the new fund was addressing). The first batch of investments was also named, receiving a total of $700,000 (a breakdown of how much went to each company was not available) with funding going to Comwriter.com, GiggedIn.com, TokenOne.com, GetSwift.co, and Cuzin.com. The idea is that those companies find other sources of investment too. BlueChilli chief growth hacker Alan Jones told StartupSmart the fund would also see all graduating startups that launch a minimal viable product (MVP) receive $25,000 in funds. To date, all companies going through the program have paid to have their startups built, with BlueChilli charging its services at a “cost price” of $116/hour for the team. Jones says it differs from a design agency in that startups have access to the BlueChilli curriculum, as well as office space and other services. All startups built by BlueChilli are developed on their own proprietary platform called “ChilliSource” (a .net framework), though Jones indicates that startups can graduate to other platforms if and when necessary. Eckersley-Maslin says it’s hoped the fund will invest in between 60 and 100 startups over the course of five years, something he believes is achievable given 45 startups have already been launched in two-and-a-half years. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
It shouldn’t be up to Australian startups to get politicians interested in the startup industry, according to Nitro founder and chief executive officer Sam Chandler. With Alex Greenwich MP, an independent in the NSW state parliament, announcing today he will be based out of Fishburners co-working space in Sydney for the next few weeks, StartupSmart asked a few influential startup industry figures how to get more politicians interested in the startup industry. Sam Chandler, founder and chief executive officer of Nitro: “Voters like jobs and the technology industry will create more jobs than any other in the coming decades. Any politician who doesn’t realise the importance of the technology economy doesn’t understand the world around them. “Politicians who seek to understand the importance of the startup ecosystem and drive policy accordingly will be rewarded by their constituents. On the other hand, those who miss the opportunity to support sustainable high-value job creation in a post-mining boom era will have shorter careers. “I think the better question is, ‘What can the government do to better engage with startups and the broader technology industry?’ The nation’s unemployment rate will depend on that question. Over the next several decades, the votes will be on the side of those politicians who got smart.” Laura McKenzie, chief executive officer Scale Investors: "In order for our government to better understand and formulate a package of pro-entrepreneurship and pro-angel investing reforms to revitalise the Australian economy, it makes perfect sense for our MPs to fully immerse themselves in our community. “Being based in Fishburners will enable Mr Greenwich to see first-hand what is required to support and promote high growth startup businesses in Australia. It's a great opportunity for the startup community to get him excited about startups. “In the UK, a country which has wholeheartedly supported entrepreneurs with tax and economic reforms over the last 5 years, members of the entrepreneurial community and MPs frequently collaborate, and there are even regular events at the Houses of Parliament." Alan Jones, chief growth hacker Blue Chilli: “Alex Greenwich wants to represent the interests of his constituents as best he can, and he represents an electorate that includes the densest population of startups and associated services in Australia. He has the additional flexibility of being an independent, meaning he only has to concern himself with his electorate, and not the needs of his party. “The startup industry has trouble getting mindshare at a Federal level because the problems we face aren’t on the radar at a Federal electorate level. When the national focus is concerned with the “immediate impact of changes to taxes, healthcare, education and jobs it can be hard to get it refocused on actions that could impact the growth of the economy in five or ten years’ time. “Everybody knows our economy is going to slow with the downturn in demand for our mining sector output. That has to impact unemployment figures, and that’s always in the top three issues federally. That might be the best opportunity to make a case for our industry at a Federal level. “In the meantime, we’d welcome Federal parliamentary members and their advisors to spend a day at BlueChilli — the best way to understand the tech startup industry is to experience it, even just for a day. No media circus, no reflective vests and hard hats, just real innovation and jobs-growth potential.” Matt Barrie, chairman and chief executive officer Freelancer: “It’s tough because the government tends to get confused when it comes to the terms ‘digital’ and ‘startups’. “The word ‘startup’ gets confused with SME. So every time the government comes up with a startup package, it’s broadened to include your local fish and chip shop. While ‘digital’ gets watered down to include all these businesses that aren’t high growth. “There are some politicians aware of the issues, like Malcolm Turnbull, who are going to make changes. “But I think it’s an education issue. Most politicians still don’t really get it, and you can see it in the language when they talk about startups. What will help are the success stories and the good thing is that there are a lot of really amazing companies coming out of Australia.”
Most days, it feels like I’ve been working in the lean startup movement for 20 years. The tech startup industry has been through so many massive changes since we first got started, we’ve packed many years of experimental cycles into such a short time. Do you remember what year The Lean Startup by Eric Ries was first published? However long it’s been, how do we know we’re doing a great job? Before you chuck in your full-time job and begin the startup founder journey, how do you know for sure an accelerator or incubator is going to improve your chances of success? Since incubators and accelerators are such a recent phenomenon and teaching/practising methodologies that are still changing in response to a rapidly changing industry, I don’t think anybody can yet say with authority what constitutes good practice in the space. If a poor accelerator program manages to secure an intake of world-class startups that go bananas almost despite the accelerator program, how do we distinguish that from a great accelerator program that makes a significant difference for a cohort of middle-rank startups? A Second Century Ventures study published recently in VentureBeat found that in the US it was necessary to observe the outcomes of a graduating cohort for four years after graduation from an accelerator before it was possible to draw a conclusion about performance. Only problem is: we don’t have that much data on the Australian accelerators yet. Startmate is Australia’s earliest accelerator and its first cohort graduated in 2011. AngelCube started in 2011 but didn’t graduate a class until 2012. Pollenizer was founded in 2007 but was more akin to a digital agency with an equity stake until 2011-ish. BlueChilli began offering an accelerator program in late 2012. I think the best way to improve the performance and ensure the value of incubator and accelerator programs is to encourage transparency and validate and publish data for key metrics. One key metric for accelerators could be the delta in the total capitalisation of the accelerator’s graduating startups over five years. Another might be the return to investors in the accelerator. Some have called out the “11 millionaires created” stat on the new BlueChilli homepage as a ‘vanity metric’ and asked if, really, those startup founders are just ‘paper millionaires’. Well, of course they’re still paper millionaires — the earliest of them has only been operating their startup for two years. (Some would say being “just” a paper millionaire is a whole lot better than not being a millionaire at all.) Some have called for industry or government regulation and accreditation, but surely any accreditation or regulation regime would lag the current industry best practice by at least a year and more likely a parliamentary term. And accreditation would forever be rewarding dogmatic adherence to outmoded methodology. Accelerators learning at the coal face about what’s working would be unable to practice new methodology without risking their accreditation. I want Australia’s startup accelerators to change, adapt, learn and grow as rapidly as possible. As an investor, startup co-founder and startup advisor, I don’t want our startup education system subject to the operating principles of the industrial era. The reason it feels like we’ve been at this for decades is because our industry learns and grows faster than any other. Rapid learning through early exposure to the marketplace is what defines us. If Second Century Ventures is correct, we’ll begin to see how well Australia’s startup accelerators have been performing in a year or two. In lean startup terms, an eternity, I know. I’ll be waiting impatiently too… By the way, The Lean Startup by Eric Ries was first published in 2011! Alan Jones is chief growth hacker at BlueChilli and teaches lean startup skills. This article originally appeared on the BlueChilli blog.
Startup incubators Pollenizer and BlueChilli have, unbeknown to each other, both launched new online courses which they hope make their advice more accessible to time-poor and cash-strapped entrepreneurs. BlueChilli chief growth hacker Alan Jones says it’s no surprise that the two incubators are on the same page. “Like Pollenizer, BlueChilli has a supply problem,” he says. “Here at BlueChilli we see 200 to 250 ideas each month and on average say yes to two. We’re looking for a way to give people not yet ready for BlueChilli a chance to learn how to be a great startup founder. “It’s also to help people that are considering to be a startup founder, but aren’t quite ready to chuck in their full time job yet.” BlueChilli’s 99toLaunch program runs for 90 days and costs $199, but will eventually move to $299. For $US199 entrepreneurs can take part in Pollenizer’s 60 Day Startup program, which has been designed to help them go from “idea to action as quickly as possible”. Both set out a schedule for participants to follow and help guide entrepreneurs through the early stages of creating a startup. “Pollenizer and BlueChilli have been around for about the same amount of time, and each have been developing a knowledge base, a curriculum, and both are at the point of maturity, where we can take a chunk of this stuff and make it available,” Jones says. Pollenizer chief executive officer Phil Morle says the 60 Day Startup program is a way to make the incubator’s startup advice available to many more people. “The genesis of it comes from the last three years of Pollenizer where we’ve needed to develop waves of startups and rapidly get all of our teams and entrepreneurs up to the same level,” he says. “About three years ago we developed a training program internally and a year after that made it available for other people, all over the world for the last couple of years. [We did this] both ourselves and as part of the muru-D program. “The challenge has always been, as a business model how do we make this available to as many people as possible, make sure they’re not redeveloping the wheel, and how do we not charge them money they don’t have. “And yet we need to make a profit from it, so we moved it into this online format.” The 60 day program includes 12 modules, which each focus on a specific aspect of founding a startup, including developing a strong idea, designing a minimum viable product, and finding a co-founder. The program can be taken anytime, and entrepreneurs can complete it at their own pace. “The biggest questions for entrepreneurs starting out are: What’s normal? What should I be doing? Some days it feels too hard so you don’t want to do anything, you feel like you’re never going to get anywhere,” Morle says. “This program tells you what to do, based on our experience. “Entrepreneurs can have a self-motivated program, but something happens every single day to take them out of procrastination and help them create a business that has been proven, been launched, has customers and evidence, and that they can starting talking to people about.”
Reform of Australia’s employee share scheme laws could potentially boost the economy by $1.4 billion in the long run, according to a report by Employee Ownership Australia and New Zealand (EOA). The EOA chair and Link Market Services global head of EPS, Angela Perry, says the Employee Share Schemes – Their Importance to the Economy report presents a strong case for a reversal of the 2009 Employee Share Scheme laws. Currently employees are taxed when they receive share options from their company, rather than when they are sold or become full shares. The report’s key findings are as follows: The amount of money subject to income tax under the employee share plans has halved since the 2009 changes. Reversal of those changes could increase tax revenue by over $215 million per year. If option plan taxing returns to the pre 2009 position then there is potential to increase plan usage by over 200% and increase annual taxable income by over $131 million. With reform, salary sacrifice plans are likely to increase immediately by 10%, impacting 40,000 employees and increasing the amount of savings per employee to $5000. The findings add to an already considerable pile of evidence of the benefits of reform, supporting what could now be considered a near universal view of those in the startup industry. “We weren’t surprised by the findings, but we felt it was important to get the facts and figures out there,” Perry says. “While most people in the startup industry would anecdotally agree with the evidence, with thought it was necessary to provide evidence in support, with distinct and reliable information.” The study examined anonymous client data from Australia’s two key share plan administrators, who together combine for between roughly 80% and 90% of the market. Among those who have spoken out in favour of employee share option scheme reform are Australian Private Equity and Venture Capital Association chief executive Yasser El-Ansary, RetailMeNot founder Guy King, Blue Chilli’s Alan Jones, Shoes of Prey co-founder Michael Fox, Starfish Ventures’ John Dyson, Deloitte, the Institute of Public Accountants, and federal Minister for Communications Malcolm Turnbull. However, even with the support of a prominent cabinet minister the government has been slow to act on the issue. A review into employee share scheme laws, which was started under the former Labor government late last year, was due to report to the Department of Treasury in December. However, it appears to have stalled during the change of government, before consultation was reopened by the Coalition government in January. That consultation period closed on February 7 and in late May the department said issues raised regarding share option scheme laws were now being considered as part of the Prime Minister’s Taskforce which was established to develop a National Industry Investment and Competitiveness Agenda, which was due to make its recommendations to government by “mid 2014”. StartupSmart asked the government when it expects to release its findings from the review and had not received a response at time of publication. Perry was optimistic reform would eventually occur. “We will be sending this to our contacts within the government,” she says. “(Liberal MP) Tony Smith has always been a supporter, and we’ll be putting forward a case based on reversing those 2009 changes.”
One-way tickets to Delaware an option for startups, in light of the Entrepreneurs’ Infrastructure Program6:59AM | Tuesday, 10 June
The proposed commercialisation strand of the Entrepreneurs’ Infrastructure Program is “comically inadequate”, according to Blue Chilli chief growth hacker Alan Jones. The first glimpse of the program emerged last week when the Department of Industry released a discussion paper of the program’s proposed services. That paper says the proposed commercialisation strand of the program will provide a range of tailored commercialisation services designed to provide entrepreneurs and businesses access to advice and support to enhance their prospects of commercial success. “If the commercialising ideas strand of the program goes ahead as planned in November the scale and depth of the support proposed is comically inadequate,’’ Jones says. “Australia needs a significant investment in STEM education, a re-write of the tax treatment of employee share option schemes and tax incentives for all levels of investor in early-stage tech startup ventures. “This discussion paper relates to none of these fundamental issues. “Workable models achieving real results are available for all to see in the UK, Canada and the US, we need only look, learn and have the vision to implement them here.” He adds the program will do little to stem the tide of talented individuals and great technology startup ideas leaving Australia. “The UK, Canada, Israel, Germany, Singapore and of course Silicon Valley are now all significantly more supportive to Australian tech entrepreneurs and their valuable IP, and our current government seems unable to grasp that our tech startup industry is not only the most likely source of our next major export industry, it is also a highly portable industry that can and will relocate if we force it out,” he says. “By freezing and then dismantling the Commercialisation Australia program and Innovation Investment Fund, the federal government has left many of our best ventures and most talented startup entrepreneurs struggling just to find a way to keep their doors open in 2014. “In the light of this latest discussion paper, how are we meant to dissuade them from booking a one-way ticket and registering a Delaware corporation?” (The US state of Delaware has historically had corporation-friendly laws and tax regulations.) Australian Private Equity and Venture Capital Association chief executive Yasser El-Ansary says the program won’t be able to encourage more private sector investment into startups on its own. “One of the most important priorities in the area of industry policy should be to facilitate more private sector investment into startup businesses,’’ El-Ansary says. “This program could help with that, but on its own it certainly won’t be a silver bullet.” The government is seeking industry consultation on the program’s proposed services, with the consultation period lasting until the end of the month. El-Ansary was critical of the amount of consultation government sought from industry prior to the development of the policy. “The government is going to have to lift its level of pre-decision consultation with key private sector industry groups on measures like this,” he says. “I don’t know anyone who was consulted on the merits of this policy before it was announced. “The new investment and competitiveness agenda that the government is currently working on for release in the middle of this year has to meet some very high expectations. “Abolishing key programs like the Innovation Investment Fund, and abandoning tax reforms to venture capital limited partnerships and the research and development tax incentive over the last few months has left many wondering what direction the government wants to take in this area of policy.”
We asked some Australian startups what they thought of the budget and how it might affect them. Here’s what they had to say. Michael Fox, CEO, Shoes of Prey: It's a challenge for tech startups raising capital in Australia and the temptation to move to the US where it's significantly easier to raise funding is high, and a lot of startups move for this reason. The IIF and CA were both designed to help fill this funding gap in the Australian market, so with both of them gone we'll lose a lot more Australian tech startups to the US. The reduction in the refundable percentage of the R&D tax credit will further exacerbate this. Alan Jones, head of marketing, BlueChilli: Support for the tech startup industry is not about handouts to lazy businesses, it's about arresting the innovation brain drain. In five years we can build a $50m tech startup with a team of 10 and a few laptops and mobiles. But unlike a manufacturer or a miner, that IP is highly mobile and can be based anywhere the industry support is greatest. This budget is the right step forward if what we want to do is create more Atlassians – creating most of its value for the US economy and paying most of its tax in the UK. Bosco Tan, co-founder, Pocketbook: The impact for early stage and fast growing startups is staggering. The pulling back of government support makes our companies immediately less competitive to economies like Singapore. The temporary R&D cutback conditions and the scrapping of CA & IIF to start a new program means that there will be at least one year where funding sources will be even tighter. In our world, all startups look for is a supportive and stable environment for us to compete globally. This also means a tax system around employee share schemes that actually works for companies of our size. It should be in our government’s interest to help build economic value and jobs like how Facebook and Google have contributed to the US economy. Damien Andreasen, co-founder, LawPath: Technology in Australia is a developing industry with the potential to create over half a million jobs in the next 2 decades*. Reducing funds available to support innovation and early stage tech businesses shows a lack of foresight. Reducing the R&D incentive by 1.5% will hurt startups like LawPath, we depend on the rebate to plan product development, staffing levels and even a slight reduction can have a big impact. The upside of the 1.5% reduction in company tax won't offset the R&D loss, most startups are yet to hit breakeven. The loss of the CA and IIF grants are regrettable but shouldn't stop Australian entrepreneurs getting on with the job of bringing innovative new tech business to life. Shane Greenup, co-founder, Rbutr: The largest companies in Australia are all mining, banking and supermarket conglomerates, and BHP has an annual revenue of $72 billion, followed by Rio Tinto at $59.8 billion and Wesfarmers at $58 billion. Then you look at the tech giants in the USA: Microsoft’s revenue is $77.8 billion; Google is $59.8 billion; and Apple is $170 billion. There is really no reason why companies as large and successful as these couldn't be founded in Australia and grown here. Tech doesn't require resources like mining does, and isn't limited to the local Australian market like supermarkets tend to be. You would think that investing in the development of companies like these would be a huge priority for any government.
Strengthened government investment in innovation and tax policy changes to support that innovation are two outcomes a number of startup industry figures are looking for when the federal government’s budget is released on Tuesday night. However, one change they hoped would arrive in the budget now won’t go ahead, with the Australian Financial Review reporting that the government has put planned changes to employee share schemes on hold because it was at odds with the budget’s “tough love” message. Blue Chilli head of marketing Alan Jones says he is frustrated by the move. “[The delayed changes] would allow startups to attract employees and over the long term retain key employees,’’ he says. “It wouldn’t be out of step with the tough love message.” RSM Bird Cameron director Con Paoliello says the budget should recognise that the economy is no longer being driven by the manufacturing or services sectors, and should invest in incentives, infrastructure and innovation. He wants to see tax incentives for investors that would help get startups off the ground. “Investors rely on private investors or public resources to make the initial investment before they can access R&D tax breaks,’’ he says. “In Australia if a person invests in a startup company they don’t gain access to any tax benefits, which makes finding private capital difficult. “RSM Bird Cameron believes the federal budget should address this and consider options such as expanding the proposed exploration development tax incentive to non-resource startup companies or providing investors with a capital gains tax exemption upon sale of a startup company.” Cost cutting has been a bit of a theme in the lead up to the budget, but Australian Private Equity and Venture Capital Association chief executive Yasser El-Ansary says it’s only one part of the solution and government should also look to encourage more businesses to invest in innovation. “If we can unlock the growth potential of businesses, you’ll see that translate into more tax revenue flowing through to the federal budget,’’ he says. “When you look at our global competiveness position, Australia currently ranks number 15 in the group of 34 OECD countries [based on the World Economic Forum’s Global Competitiveness Index], and in order for us to lift our productivity and economic growth we are going to have to invest more in innovation.” It’s a view also held by OneVentures managing director and CEO Dr Michelle Deaker. “Government funding programs foster the broader investment community and the IIF [Innovation Investment Fund] model where the government matches private investor capital, sharing risk and taking a low capped return, encouraging capital from institutions and high net worth individuals to the venture capital asset class. “The multiplier effect of the government support is clearly visible when you look at OneVentures’ Innovation Fund through the additional capital realised into our companies via co-investment and syndication. “In the medium to long term, the quantum of new jobs in potentially new, emerging industries generated through this program for the economy represents a strong case for government support.” Dr Deaker says she expects the government will be looking at developing the Innovation Investment Fund even further, despite the National Commission of Audit recommending the fund should be abolished. The idea raised by the National Commission of Audit that funding startups should be left to the private sector is one that should be ignored by the government when considering budget policy, according to Australian Institute for Innovation chief executive Paul Cheever. “The fundamental flaw in this opinion is that it presumes a process of capital allocation that is irrational and non-evidence based, and therefore which itself offends the principles of economic management of an efficient market framework,’’ he says. “The reality is that almost every startup, in the absence of overwhelming evidence (repeat paying customers already present), is rationally seen by both investors and advisers as an alchemist’s offer to turn lead into gold.”